The Balance of Payments: Equilibrium and Adjustment (Mon., Aug. 26-Wed., Aug. 28)1 Kansas State University Department of EconomicsAdvanced International Economics (International Economic Policy) Economics 823Fall 2002E. W. Nafziger ([email protected])8:05-9:20 MW,Waters 329Office hours: 9:30-10:15 MWF, or appointment - Waters 312.I will calculate your semester grade by weighing the mid-term examination one unit, your classpresentations based on a research paper (see last section) one unit, and your final examination oneunit (old exams are at http://www.ksu.edu/economics/nafwayne/class.htm). Additionally, I willraise your semester numerical score if you make an excellent contribution to class. RELATIONSHIP OF THE COURSE TO OTHER INTERNATIONAL ECONOMICSCOURSESThe prerequisite for this course is Economics 681 or equivalent. The course does not cover thesame ground as, but is complementary to, International Economics (Economics 681),International Trade Theory and Policy (Economics 981), and International Markets andAgricultural Trade (Agec 840). The major objective of the course is to help students acquire an analytical framework to examinecontemporary international economic issues, such as the global (especially Asian, Latin, and Russian)financial crisis, international adjustment and reform in developing and transitional economies, U.S.-Japanese bilateral economic relationships, trade and income distribution, regional economicintegration, the international monetary system, the U.S. balance of payments problem, andglobalization. The goal is to provide students with the background, experience, and tools forfuture analysis of international economic problems and policies. REQUIRED MONOGRAPHSClaflin Books and Copies (CBC), Economics 823: Advanced International Economics: Professor E. Wayne Nafziger. Fall 2002.For orders for the following, see http://www.iie.com/ or the bookstore:Morris Goldstein, Managed Floating Plus (Washington, D.C.: Institute forInternational Economics, 2002). ISBN 0-88132-336-5.Dani Rodrik, Has Globalization Gone too Far? (Washington D.C.: Institute for International Economics, 1998). ISBN 0-88132-241-5Catherine L. Mann, Is the U.S. Trade Deficit Sustainable? (Washington D.C.: Institute for International Economics, 1999). ISBN 0-88132-265-22Michael Mussa, Argentina and the Fund: From Triumph to Tragedy (Washington, D.C.: Institute for International Economics Analyses in International Economics 67, July 2002). ISBN 0-88132-339-x. William R. Cline, Trade and Income Distribution (Washington D.C.: Institute for International Economics, 1998). ISBN 0-88132-216-4PLAGIARISMPlagiarism: University policy is: “Plagiarism and cheating are serious offenses and may be punishedby failure on the exam, paper, or project; failure in the course; and/or expulsion from the university.”For more information refer to “Academic Dishonesty,” http://www.ksu.edu/uauc/fhbook/fhxf.html.REQUIRED READING ASSIGNMENTSThe Balance of Payments: Equilibrium and Adjustment (Mon., Aug. 26-Wed., Aug. 28)Peruse U.S. President, Council of Economic Advisors, Economic Report of the President, 2002,overview & ch. 1, pp. 15-64; ch. 3, pp. 125-143; ch. 5, pp. 251-300; tables on pp. 438-448 (withemphasis on examining US’s international position in context), http://www.access.gpo.gov/eop/ orgovt publications office, Hale Library, 3rd floor, for Wednesday, August 28, 2002. Lecture willfocus on meaning and concepts pertaining to the balance of payments, especially that of the US. Is the U.S. Trade Deficit Sustainable? Catherine L. Mann, Is the U.S. Trade Deficit Sustainable? (Washington D.C.: Institute for International Economics, 1999). ISBN 0-88132-265-2C. Fred Bergsten, “Let the Dollar Fall,” Financial Times, July 17, 2002, http://www.iie.com/papers/bergsten0702.htm, and “The Dollar and the U.S. Economy,” Testimony before the Committee on Banking, Housing and Urban Affairs, U.S. Senate, May 1, 2002, http://www.iie.com/papers/bergsten0502.htm3The Global Financial Crisis Michael Mussa, Argentina and the Fund: From Triumph to Tragedy (Washington, D.C.: Institute for International Economics Analyses in International Economics 67, July 2002). ISBN 0-88132-339-x. Frederic S. Mishkin, “Global Financial Instability: Framework, Events, Issues,” Journal of Economic Perspectives 13(4) (Fall 1999): 3-20, in CBC, pp. 7-24.The International Monetary System, Exchange Rates, and Reform of the IMF Kenneth Rogoff, “International Institutions for Reducing Global Financial Instability,” Journal of Economic Perspectives 13(4) (Fall 1999): 21-42, in CBC, pp. 15-46.Barry Eichengreen, Toward a New International Financial Architecture: A Practical Post-Asia Agenda (Washington, D.C.: Institute for International Economics, 1999), CBC, pp. 47-56.Anne Krueger, IMF First Deputy Managing Director, “Sovereign Debt Restructuring and Dispute Resolution,” Bretton Woods Committee Annual Meeting, June 6, 2002, http://www.imf.org/external/np/speeches/2002/060602.HTM.Milton Friedman, "The Case for Flexible Exchange Rates," in AEA, Readings in International Economics (Homewood, Ill.: Irwin, 1968), pp. 413-37, in CBC, pp. 57-69.Stanley Fischer, “Exchange Rate Regimes: Is the Bipolar View Correct,” Journal of Economic Perspectives 15(2) (Spring 2001): 3-24 (or http://www.imf.org/external/np/speeches/2001/010601a.htm).Morris Goldstein, Managed Floating Plus (Washington, D.C.: Institute forInternational Economics, 2002). ISBN 0-88132-336-5. Joseph E. Stiglitz, “Capital Market Liberalization, Economic Growth, and Instability,” World Development 28(6) (June 2000): 1075-1086, in CBC, pp. 70-81. Sebastian Edwards, “How Effective are Capital Controls?” Journal of Economic Perspectives 13(4) (Fall 1999): 65-84, in CBC, pp. 82-101.Gerard Caprio and Patrick Honohan, “Restoring Banking Stability: Beyond Supervised Capital Requirements,” Journal of Economic Perspectives 13(4) (Fall 1999): CBC, pp. 102-23.Stanley Fischer, “On the Need for an International Lender of Last Resort,” Journal of Economic Perspectives 13(4) (Fall 1999): 85-104, in CBC, pp. 124-143.4Percy S. Mistry, “Coping with Financial Crises: Are Regional Arrangements the Missing Link?” in United Nations Conference on Trade and Development, International Monetary andFinancial Issues for the 1990s, X (Geneva,